The process of setting “benchmarks,” i.e., identifying accurate historical data against with a data set can be compared now and in the future, is often used to evaluate business proposals and operations. Business leaders often find it useful to measure their own companies' revenue, profits, etc., against that of their competitors or companies considered industry leaders in order to evaluate their organizations' position within an industry (and, perhaps, to spur changes within their respective organizations). Indeed, benchmarking has become one of the foundations of modern business management.
One area of business operation that is sorely in need of accurate benchmarking tools is information technology (IT) spending (i.e., spending on IT-related goods and services). Perhaps unlike the situation in the late 1990s, today business leaders are demanding that IT departments justify new spending initiatives (as well as existing spending on items such as personnel, equipment, applications, training, etc.), before approving same. As these demands have increased, others have tried to adopt benchmarking approaches as a means for such justifications.
Indeed, IT benchmarking has become its own industry. Consulting service providers such as Gartner, Inc. have devoted significant resources to gathering data concerning IT spending in many businesses across many different industries. Reports reflecting the results of such data gathering sell for hundreds if not thousands of dollars. But the raw data concerning IT spending that is presented in such reports is often difficult for laypersons to comprehend. For example, while figures for hundreds of companies in a given industry across categories such as staffing costs, IT budget as a percentage of revenue, IT spending per employee, IT spending per timekeeper, IT operational budget allocations, IT operational budget changes, IT operational budget per desktop, and so on offer a rich source of raw information, these numbers offer little insight into the underlying question of whether a company is getting the appropriate value for its IT spending.
For these and similar reasons, effective benchmarking tools for IT spending are needed.